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For Rebecca and Michael, living in a two-bedroom co-op with a toddler and a dog—and a single bathroom—was unsustainable. So this past March, they put their Upper East Side apartment up for sale, with plans to rent in Brooklyn. Their building lacked a doorman and other luxe amenities common in the neighborhood, but the 1,000-square-foot place was newly renovated. Laundry was available downstairs; $1,387 monthly maintenance wasn't outlandish; and their broker was confident it would sell quickly, especially in today’s hot market.
Not so much. The place, initially listed at a not unreasonable $750,000, lingered on the market through spring and summer, drawing ever smaller crowds at the couple’s weekly open houses. (The median sale price for a Manhattan two-bedroom co-op was $1.35 million in the first quarter of 2014, according to appraisal firm Miller Samuel.) They cut the price, first to $720,000 in June, then to $675,000 in July. They even got some press. In the end, they sold for $680,000, closing in November, and earning some tough-love wisdom along the way. Yes, Rebecca and Michael encountered hurdles that just about any fellow first-time seller could face in New York. What did they learn? Read on:
A high asking price won’t get you top dollar
In February, when Rebecca and Michael first met with their broker—they chose her because she’d sold other co-ops in the building—they wanted to ask $685,000 or $695,000, based on prices for other units in the building and numbers from StreetEasy. But, armed with more recent data and articles forecasting a hot spring market, the broker convinced them to set the price at $750,000.
“We had the feeling she was overpricing it, but we said, ‘She’s the expert,’” Michael says. Adds Rebecca: “We wanted to go along with her because getting more money sounded great.”
The first open house brought 20 people through the door--but not a single offer. The hot spring market never materialized. “Our immediate reaction to the broker was, let’s drop the price,” says Michael. “But she cautioned us against doing that too quickly.” The broker believed what everyone else was saying—that it was a great time to sell and prices were going up—and insisted the couple get as much as they could. (They were quick to note that the broker was “excellent,” always professional and hosting open houses week after week.)
Consider this a cautionary tale, then: a high price tag does not mean you’ll get more money. Indeed, in a competitive market, setting a lower price could actually bring in bigger bucks by sparking a bidding war.
If you do find that your price is too high—say, if you get a lot of lookers but no offers—it’s important to adjust quickly. (Here's a quick primer on when to drop the price.) “The level of interest in our apartment never regained what it was at the beginning,” Michael says. “When it was new on the market, a lot of people were eager to see it.” After a few months and a price cut, the reaction was muted, with some apartment hunters seemingly wondering what was wrong with the place, says Rebecca. “People could smell the desperation.”
Plus, since buyers could see that they’d lowered the price, they seemed less willing to offer more than the most recent asking price, and the sellers were in a weaker position to negotiate, they say. After significantly reducing the price to $675,000 on July 4, the couple got several offers. In retrospect, Michael and Rebecca wish they had gone with their gut.
Don’t take the highest bid
After their final price cut, the couple received three “serious” offers, and they were about to sign a deal for one of them. But then they heard from another set of buyers who seemed more qualified: they had a longer track record in their current apartment and their jobs, and their finances were solid, particularly the documentation about where their financing was coming from, Rebecca explains. Thinking these buyers would be stronger candidates for co-op board approval, Rebecca and her husband chose them instead—and it worked.
In short, the highest offer is not necessarily the best offer, particularly in a co-op. At the Carnegie Hill building (and at co-ops across the city), any buyer has to pass muster with the board. “Having been on the board for many years, I knew the building could be picky about potential buyers,” Michael says.
The buyer’s broker can make or break a deal
Hiring a knowledgeable, hard-working broker is a given for any seller, unless you've decided to sell the place yourself. But vetting the buyer’s broker is equally important. You want to make sure that your buyer is—or is working with—someone who can close the deal.
Indeed, the couple’s highest offer came from a buyer whose broker seemed unfamiliar with the sales process, and who insisted on corresponding by phone, rather than email, but didn’t ever pick up, Rebecca says. This wasn’t going to end well, they thought, so Rebecca and Michael moved on to another bidder. (Remember what we said about the difference between the highest offer and the best?)
Show, show, show
The sellers planned their open houses to coincide with those of similar apartments, with the goal of luring people spending their weekends shopping for Upper East Side co-ops. Thus, the exact timing of viewings would change week to week, meaning the couple effectively gave up their apartment on Sundays. With the exception of one holiday, they hosted an open house every week for months, plus a few weekday showings per month for buyers coming for a second look.
“We were living a very modified lifestyle,” including keeping the apartment clean at all times and replacing the dining room table with a smaller model to make the place look larger, Michael explains. (The couple didn’t invest much in staging, but did take down family photos and switched out an overhead lighting fixture to brighten up the living room.)
But the flexibility was an essential element of completing a sale, they say. “If I say, ‘No, I’m only going to have an open house on the third Sunday of every month from 3pm to 4pm,’ you’re not going to get people coming through,” Rebecca says.
Budget more time
It’s not earth-shattering, but it bears repeating: however long you think this process will take, add time.
Even though the buyers faced no “substantive hurdles” getting board approval, Michael says, the process still stretched on—for about two months from the buyer’s submission of the board package to the closing. “The management company took their time in processing paperwork,” he says, noting that two weeks passed before management distributed the package to the board. Also, one of the buyers was from overseas, so the board had to do a foreign credit check, which took a few weeks.
“We weren’t trying to sell in order to buy someplace else, we didn’t have that pressure,” Michael says. “There were several delays. Everything took longer than we thought.”